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Amazon’s Deals with Brands Hurts 3P Sellers

Amazon gives preferential treatment to listings from brands that agree to partner with the marketplace, to the detriment of third-party sellers. So says a study from market research firm L2.

Brands such as Burberry and Levi Strauss that have formed a partnership with Amazon have “scored unusual deals that let them control how their merchandise is sold through the world’s largest online retailer,” according to Bloomberg, which wrote about the report last week.

Earlier this year, L2 founder and CEO Scott Galloway called Amazon “the Tony Soprano of ecommerce.” As an example of how Amazon deals can benefit brands, Galloway said in a video on the L2 website: “Burberry has traded official distribution of a limited number of its SKUs in exchange for Amazon cleaning up third-party distribution.” Brand partnerships with Amazon run the spectrum, he said.

In its July 2014 report, L2 took a look at 27,517 Amazon listings of 315 brands from six verticals including Beauty, Hair Care & Color, Home Care, Fashion, Personal Care, and Watches & Jewelry.

A chart from the report shows that brands that do not officially distribute on Amazon.com have a far greater number of listings being sold by third-party merchants – thus giving the brands less control over pricing and how they are represented.

Amazon accounts for 26% of all ecommerce purchases in the U.S., and 6% globally, and it wields its power over brands and retailers in a way that makes Walmart of the 90’s look cuddly, according to Galloway. “Amazon’s worldwide network of third-party merchants all but ensures that brands have a presence on the platform, whether they want to or not.”

The report is available to members on the L2 website, and an excerpt of the report is available for free.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.